The San Francisco-based startup has written to Maharashtra chief minister Devendra Fadnavis detailing its complaints about the draft rules which it said will harm the interests of drivers and riders.Aditi Shrivastava | ET Bureau | October 24, 2016, 09:18 IST

BENGALURU: Uber has raised a raft of objections to Maharashtra’s draft rules to regulate ride-hailing apps, pitting itself against one more state government as its model comes under pressure in its most important markets.

The San Francisco-based startup has written to Maharashtra chief minister Devendra Fadnavis detailing its complaints about the draft rules which it said will harm the interests of drivers and riders. "Some of the proposed rules, if adopted, would mean an end to the Uber that Mumbaikars know and love today," an Uber representative wrote on October 21.

Uber’s gripes with the draft rules are mainly threefold — they relate to the proposed restrictions on engine capacity, price tags for permits, and pricing.

With Maharashtra’s draft rules, Uber and its competitor Ola are faced with potentially adverse regulatory outcomes in their three main markets— Delhi, Mumbai and Bengaluru. In all these cities the practices of app-based cab aggregators are under the scrutiny of the respective high courts and all three cities have banned surge pricing.

The letter from Uber comes three days after the Maharashtra government made its draft city taxi rules public, including some steps towards welcoming app-based taxi companies. The draft rules make no mention of the need for a physical panic button, digital meter or controls over aggregators’ fleet sizes.

Uber, in its communication to the chief minister, is arguing that several of the proposals will have deleterious consequences including one which requires that half the fleet consist of cars with engine capacity of over 1400 cc. Price tags for permits, which can go up to Rs 2.61 lakh, are too steep, and "the requirement for Uber to deposit Rs 50 lakh per 1,000 vehicles will make the business unviable", according to the company.

It is also arguing against price floors and price caps. According to experts, this regulation, if implemented in its current form, will make taxi-aggregator model quite difficult, and benefit incumbent players including Meru, Easycabs, and auto-rickshaws.

"The policy will also fix a minimum threshold for the fare. This will be important for the traditional taxi players. After the new ecommerce guidelines, companies can’t provide discounts to customers. This has slowed down business. Taxi aggregators will face similar issues," said Jaspal Singh, cofounder of Valoriser Consultants, a consultancy engaged in providing market research services for transport operators.

The policy is not yet clear on key points, including if app-based taxi permit holders can work with multiple operators or switch operators; cap on the maximum numbers of vehicles per aggregator; and how and when the operators can ban drivers.

The cab aggregation space in India has a wide spectrum of players like Uber, Ola as well as incumbents in the form of radio taxis and local black and yellow taxis, and the government has closely been looking to introduce regulations to monitor each of these players in a bid to ensure a level-playing field in the industry. Ola and Uber did not reply to emails seeking comment.

In October last year, Uber had launched a social-media campaign asking its Mumbai users to protest against proposed government rules, primarily because the proposed scheme required taxi operators to maintain a minimum fleet of 1,000 and a maximum of 4,000 taxis, which if enforced, will force Uber and Ola to reduce the number of drivers in the city.